The United Arab Emirates can be listed among the states with the most successful economies. The effective development finds reflection in UAE citizens’ relatively high quality of life and happiness levels. It is possible to explain the state’s successful economic development as the combination of effective economic diversification strategies, including infrastructure development, and the presence of substantial natural resources that provide funds.
The UAE’s ongoing development is supported by the success of efforts to avoid excessive reliance on revenues from natural resources. Between 2000 and 2012, the share of the country’s GDP generated by non-oil activities, mainly the services industry, has been increased by 5.7%, and the rate of diversification is supposed to increase in the future (Almutairi, 2016). Apart from that, based on the Ease of Doing Business index, the UAE outperforms the majority of the GCC economies in terms of the attractiveness for new investments and businesses (Almutairi, 2016). The tourism and recreation services present another area that supports economic diversification (United Arab Emirates Ministry of Economy, 2019). Diversification is also supported by the rapid growth of the construction sector, the export-based manufacturing industries, and the financial services industry.
Despite diversification efforts, natural resources remain the major economic source of the country that supports its prosperity. The UAE is less dependent on hydrocarbon exports compared to other prominent GCC economies, including Saudi Arabia (Almutairi, 2016). However, revenues from the oil sector still account for 30% of the state’s real GDP (UAE Ministry of Economy, 2019). They are followed by revenues from the vehicle trade and maintenance services industry that represent 11.6% of the GDP (UAE Ministry of Economy, 2019). Thus, in spite of the growth of construction, manufacturing, financial, transportation, and vehicle repair services, natural gas and oil still belong to the state’s major economic sources.
References
Almutairi, H. (2016). Economic diversification in GCC economies: A heaven for investors. International Journal of Economics and Finance, 8(4), 84-92.
United Arab Emirates Ministry of Economy. (2019). Annual economic report 2019 (27th ed.). Author.